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Jim Johnson, Minnesota's 'Mr. Inside,' finds himself on the outside now of Obama campaign

James A. Johnson
goldmansachs.com
Jim Johnson

Mr. Inside is suddenly on the outside. Barack Obama's campaign this afternoon cut ties with Jim Johnson, who for decades has been a classic behind-the-scenes dealmaker in Washington, D.C.

But, since being named as one of three people responsible for vetting potential vice presidential running mates, Johnson has come under intense media scrutiny and Republican Party criticism. As it turned out, the vetter could have used more vetting, and this afternoon he resigned from the voluntary — but powerful — position.

In recent days, the Wall Street Journal has raised questions about personal sweetheart loan deals Johnson, 64, had made with Countrywide Financial Corp. while he headed Fannie Mae from 1990 to 1998. The loans may not have been illegal, but they were cozy, given the huge amounts of home mortgage business Countrywide does with Fannie Mae, a government-sponsored, publicly held company that helps provides funds for home mortgages.

Now, of course, both Countrywide and Fannie Mae are under fire for their roles in the country's home mortgage woes.

Johnson also was getting negative press for his relationship to Minnesota-based UnitedHealth Group. Johnson was on the board — in fact, chaired the compensation committee — at the time UnitedHealth executive William McGuire was granted more than $1.4 billion in stock options. More than $600 million of that was returned by McGuire as part of a settlement with the feds. But more trouble looms for McGuire over a stock back-dating practice that has led to a suit by UnitedHealth shareholders.

Johnson, too, did very well in the McGuire years. According to a New York Times story, he received 3.1 million UnitedHealth stock options valued at $175 million. Additionally, he received $400,000 a year as a board member.

The Republicans have had a field day with Johnson, who, they said, was a symbol of Obama hypocrisy.

In a statement after Johnson's "resignation," Obama said: "Jim did not want to distract in any way from the very important task of gathering information about my vice presidential nominee, so he has made a decision to step aside and I accept.''

Johnson, who grew up in Benson, Minn., and got his undergraduate degree from the University of Minnesota (1966), got his start into big-time politics with Walter Mondale. He served as an aide to then-Sen. Walter Mondale. He served as a senior aide on Mondale's Senate staff, was an executive assistant to Mondale when he was vice president and, finally, was chairman of Mondale's failed 1984 bid for the presidency. He vetted vice presidential candidates for both Mondale and John Kerry four years ago.

Mondale and Johnson remain close friends.

It's worth noting that despite Johnson's vetting of candidates, Mondale's ultimate choice for vice president, Geraldine Ferraro, ended up facing tough questions about the business practices of her spouse, John Zaccaro, during the 1984 race. Zaccaro consistently refused to release details of his finances.

 It was after leaving Mondale that Johnson's influence and wealth increased in Washington circles. As head of Fannie Mae, he also was chairman of both the Kennedy Center and Brookings Institution and was known in Washington as "the chairman of the universe.''

In recent weeks, there have been reports that advisers to Hillary Rodham Clinton and Obama held meetings at Johnson's extravagant home atop the Ritz-Carlton Hotel.

Mondale has pointed out that Johnson has been generous with his wealth. In Minnesota, he's made substantial contributions to the University of Minnesota, Augsburg College and the Minneapolis Institute of Arts.

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